Bill Gates has written a blog on measuring growth and improvements in people’s lives, in which he argues that GDP may be an inaccurate indicator in the poorest countries, and mentions other ways to measure overall living standards, including OPHI’s Multidimensional Poverty Index.
Gates, the Co-Chair of the Bill & Melinda Gates Foundation, examines the challenges involved in calculating per capita GDP (Gross Domestic Product, or the value of goods and services produced by a country in a year divided by the country’s population), particularly in Sub-Saharan Africa. He lists weak national statistics offices and historical biases; the difficulties of measuring the size of relatively large subsistence economies and unrecorded economic activity; infrequent reporting updates by some countries; and the fact that there are several ways to calculate GDP, which ‘can produce wildly different results’.
‘Other ways to measure overall living standards in a country are similarly imperfect; but they nonetheless provide additional ways to understand poverty,’ Gates writes in the Project Syndicate blog. ‘One, called the Human Development Index, uses health and education statistics in addition to GDP. Another, the Multidimensional Poverty Index, uses ten indicators, including nutrition, sanitation, and access to cooking fuel and water.’
Gates argues that donor governments and international organizations such as the World Bank need to do more to help African authorities produce a clearer picture of their economies, while African policymakers need to be more consistent about demanding better statistics and using them to inform decisions.
‘The better tools we have for measuring progress, the more we can ensure that those investments reach the people who need them the most,’ he concludes. You can read the blog in full here.
The Bill & Melinda Gates Foundation is the largest transparently operated private foundation in the world and aims to enhance healthcare and reduce extreme poverty around the world. The foundation is based in Seattle, Washington.